Serviced homes are the no-hassle way to rent
In serviced apartments, the room rate typically covers all the services, including cleaning and maintenance
They offer flexibility in terms of length of stay and ability to leave at shorter notice
There has been a steady build-up in serviced apartment launches in Dubai in areas located around the corridor of Expo 2020. Major developers have been typing up with branded hotel operators or launching their in-house hospitality divisions to manage and run these serviced apartments. These are mostly targeted at long-stay leisure tourists, short-term business visitors or expats who have newly moved to Dubai.
With the opening of more family leisure attractions and an anticipated growth in the number of business professionals likely to visit Dubai for work related to Expo 2020, developers are increasingly adding serviced apartments as a component to most of their residential projects.
“There has been a significant rise in the serviced/branded/hotel apartment product in Dubai’s residential market. Over 44,000 units are serviced/hotel apartments out of the total 493,000 units of residential stock [9 per cent of the total residential stock],” explains David Godchaux, CEO of Core Savills.
With further development of serviced apartments within large master plans as well as independent developments, Colliers estimates the supply of serviced apartments in Dubai to grow annually by 9 per cent. “A pipeline of 2,500 keys is expected in Dubai Investment Park alone, while Deira and Business Bay are expected to add another 2,000 keys together,” says Filippo Sona, head of hotels at Colliers International Mena.
There is a concentration of serviced apartments in Downtown, Business Bay, the Palm Jumeirah and Dubai Marina. “However, this is expected to change dramatically as new master communities open up in Dubai, for instance, Meydan, parts of Dubailand, MBR City, etc.,” reckons Hussain Alladin, head of IR and research, Global Capital Partners.
Over 17,500 serviced apartments are expected to be ready in the run-up to 2020, of which 6,200 are Grade A (by prominent developers/hotel brands) and over 15,300 are Grade B, informs Godchaux.
While a regular apartment is cheaper to rent, opting for a serviced apartment is more hassle-free and comes with more conveniences. Renting a regular apartment is more time-consuming and involves expenses such as giving a security deposit to the landlord and a non-refundable fee to the real estate agency (both vary between 5 to 10 per cent of the annual rent), furnishing the apartment and the monthly utility bills, including Internet and TV subscriptions. There’s also the endless wait at home for utility connections and deliveries of furniture and other essentials.
There are several advantages for choosing a serviced apartment over a regular apartment. “The most prominent ones are the flexibility in terms of length of stay and the fact that apartment is fully furnished. The entire property is equipped with 24-hour CCTV with secure entry and the availability of round-the-clock staff and service, including housekeeping and concierge. In serviced apartments, the room rate covers all the services – cleaning, air-condition, electricity, water, maintenance, other fees – while in residential apartments, the tenant needs to pay for these services separately. And, serviced apartments also offer recreational facilities such as gym, pool, spa, steam/sauna, F&B options and a kitchenette,” adds Colliers’ Sona.
The short-term contracts of serviced apartments do not financially commit new residents for a full year unlike long-term rentals. This is appealing to those on probation and waiting for stability. There is also the flexibility to leave at shorter notice with no penalties for early cancellation of contract.
However, all these perks come at a premium. “The range would be between Dh100 to Dh120psf to rent a serviced apartment, while the average city index is approximately Dh84psf,” comments Alladin.
“Yearly annual rent for a prime serviced studio apartment/suite in central locations is in the range of Dh110,000 to Dh130,000,” observes Godchaux.
According to Colliers, serviced apartments in Dubai maintained an average daily rate (ADR) of approximately Dh400 per night during 2017.
“Serviced apartment ADR can fluctuate on a daily basis unless a corporate or a long-term contract has been signed. Unlike regular apartments, serviced apartments do not follow the rental index published by the Real Estate Regulatory Agency,” informs Sona.
A regular apartment works out cheaper, even with utility costs. However, the annual rents for serviced residences are relatively much cheaper than daily/short-term rentals. Living in a serviced apartment is essentially like living in a hotel. Therefore, there is no feeling of being in one’s home with no permanent neighbours around.
“Usually, serviced apartments are smaller in size compared to regular apartments, since they are already furnished efficiently by the developer and because of the shorter length of stay which requires less storage and belongings by the tenant. Unless the property is a branded serviced apartment, the fixtures and furniture used can be of low quality,” concludes Sona.
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